The Debt First-Aid Kit

Emergencies are usually unexpected and unpleasant, but when you are suddenly thrown into the deep end of a crisis without any warning, knowing what to do first can save you precious time and prevent things from getting out of control in a blink of an eye. Here are a four devastating (but all-too familiar) financial emergencies many people encounter on a regular basis. (You don't need a degree to understand your money, begin saving and pay down debt. To learn more, see Top 5 Budgeting Questions Answered.)IN PICTURES: Digging Out Of Debt In 8 Steps

Unexpected ExpensesYou've been doing so well clearing your debt, but out of the blue your car decides to die, which causes you to max out your almost-paid-off credit card, leaving you no better off than when you first started.

Prescription: Start an Emergency Fund Savings Kit. Cut yourself off from relying on your lines of credit to bail you out, and start setting aside cash each month, until you have a minimum of no less than $1,000.

Setting aside $50-100 a month is a small enough amount that you won't miss in your debt repayments, but at the end of 12 months, you'll have $600-1,200 saved, and will be financially prepared for any unexpected expenses. Ideally, you should have three to six months of living expenses saved, just in case you have a run of bad luck.

Lost JobYou have been laid off or your hours have been cut back, and you're not going to make your essential bills each month, which include a mortgage/rent, food, utilities, debt and fixed lease payments.

Prescription: Pick up another job immediately to stop your bank account from bleeding out too quickly. This is not a simple question of just having to scale back in your expenses - if you don't have any income, you can't pay a dime in expenses without dipping into your savings or lines of credit. A minimum wage job at $7.25/hour should do the trick by applying a gross income of $14,500 or $1,208.33 per month to your bank account.

Additionally, cut back on non-essential services to try and match your new budget as closely as possible. This will help keep you from blacking out into the red. It may not solve your budget or job situation entirely, but it's better to be only $500 in debt each month than $1,000.

Credit Card OverdoseYou've maxed out your credit cards and have been cut off financially. Now you're living paycheck to paycheck but unable to make it through the month before the money runs out.

Prescription: Go cold turkey on your credit cards. Use cash exclusively; put your cards on ice (literally!) or cut them up. Then start tracking your daily expenses to understand where the money is really going each month. Next, dig out your paystubs and calculate how much you make (net) per month, and make a quick budget based on the following percentages ($1,000 net income per month).

Housing - $350 (35%)

Transportation - $150 (15%)

Food, Entertainment, Personal Care - $250 (25%)

Savings - $100 (10%)

Debt - $150 (15%)

The total should add up to 100% or equal to your total net income. If you pay slightly more in rent, reduce the budget accordingly in the other categories. Start an emergency fund out of your 10% of savings and start kicking your credit card habit by putting as much as you can (at a minimum dosage of 15% of your net income) towards your debt to start your financial rehabilitation. It won't be easy, but it is possible.

Life-Changing EventYou're in a middle of a stormy divorce, but are starting to drown in financial legalese without a clue of how to make sure you are protecting your assets properly.

Prescription: Perform some emergency CPR to breathe some life back into your finances. Assess the danger and check to see if you're floating towards the financial deep end by pulling your credit score to assess your credit worthiness to lenders.

Next, assess the size of your financial life jacket by listing your assets and debts. List all of the assets owned in bank, credit and trading accounts, both jointly and individually. If there are any jointly owned accounts, take a screenshot of the account online with the date and time stamp so you have visual proof of what was in the accounts as of the day you checked.

Now, begin proceedings to close any joint accounts and move your share into your new individual accounts. For health insurance, property or retirement, follow the same procedure to close all of your bank accounts, and don't forget to also change your beneficiaries.

Finally, create a budget based on your net income to stay afloat until the storm clears, if you haven't already done so. Getting your life back on track won't be easy, but when the clouds break, you'll feel like a new person starting with a clean slate.

The Bottom LineNo one has a crystal ball to see into the future or expects to get divorced or fired, but we have to plan ahead for those possible emergencies and save for life's proverbial rainy days. True financial preparedness is all about playing good defense, and should be more proactive than reactive, because you never know what might be right around the corner.